- Personal Finance»
- Investing in Stocks, Bonds, Real Estate, More»
Chapter 2: How to Make Money Trading Stocks
If you have read any of my recent articles on Hub-pages, you will know that I am a new stock investor. I have done lots of research about how to trade stocks successfully. I guess you would think that you would need to trade like a pro in order to make a steady profit. However, this could not be further from the truth.
You see billionaire investors like Warren Buffett have two things that the average investor does not. They have plenty of cash and plenty of time to spend it. Now I do have to admit that Warren Buffett may not have the time factor on his side just because of his old age. However, he does have plenty of time to sit around and speculate about which stocks will bring him the greatest returns in the next three years.
You see most of us do not actually have this luxury. We are running out of time and we have limited resources. We need to make money fast so we can finally quit our jobs and retire. All at the same time we need to pay bills and raise a family. If we are lucky we do not have too much debt or medical expenses. Let's be honest , most of us are not that lucky.
There are some ways that even a new investor like myself can profit in the current volatile market. My favorite way would be to buy shares of companies that have shown steady growth and have hit their 52 week high. A lot of people may be tempted to sell their stock at this point. However, in my opinion there is no better time to buy.
I know that gurus like Warren Buffett will tell you to buy stocks when the price is down. However, in this stock market there is a very good chance that the low price will never come back up. Why take the risk? Also, I like the idea of selling short. The market goes down a lot more these days than it goes up. For volatile stocks that have recently hit a high, this is a great opportunity to sell short and make a killing. Stocks are almost guaranteed to go down at some point no matter how good their position may be at the present time.
Selling short does require for you to have a margin account and to pay interest to borrow shares from your brokerage. However, the risk does come with many rewards and for experienced traders this may be a real gold mine. Within the next few weeks I will begin my trading of the 52 week highs and I will be posting updates shortly.